Internet advertising: Blue smoke and mirrors?

Online advertising spurious claimsIn today’s online world, marketers can’t afford to do advertising the old fashioned way. They need to rely on automated programs that serve ads to the right audiences in cyberspace.

One question I hear often from business leaders is to what degree of confidence should they place in these automated programs to actually deliver what is promised. There’s a nagging concern that some of the promises might be a bit more like “blue smoke and mirrors.”

As it turns out, some of that concern may be well-placed. Here’s one recent example of problems along these lines. And Trust Metrics, an online media rating firm, has studied more than 500,000 unique web domains – in effect, “taking inventory of the ad inventory.” And what it’s found is pretty sobering.

For starters, the online ad inventory supply is marked by dynamic change and constant evolution. Approximately 20% of the domains studied by Trust Metrics in late 2010 don’t even exist anymore as of the end of 2011. Tens of thousands of sites that may have once been vetted by agencies or networks are gone. There is no content at these domains … or they’re simply “ad farms.”

Trust Metrics claims that never have so many marketers purchased so much online ad inventory in an environment that is so degraded, a significant portion of the domains might not even be around a few months from now.

Moreover, approximately 10% of the domains Trust Metric evaluated that sell ad impressions in scaled buying environments (e.g., exchanges and networks) are actually non-English language sites – hardly valuable places to advertise. Plus, that represents more domain names than those identified as pornographic, or containing significant profanity or hate speech.

Trust Metrics’ evaluation also found that well over half of the sites available in large ad networks are what it classifies as “substandard environments which don’t adhere to even the barest minimum in publishing or editorial principles.

The bottom line on this is that of for 1 million domains that sell ads … most advertisers wouldn’t want to be on ~600,00 of them!

Of course, the flip side of this is that there are thousands of sites that do perform for advertisers – and those “good” sites drive valuable clickthroughs, sales and brand building.

But clearly, advertisers would be well advised to adopt a “buyer beware” stance in the current online advertising environment.

Online Display Ad Effectiveness: Skepticism Persists

Online Display AdvertisingAs the variety of options for online advertising have steadily increased over the years, the reputation of display advertising effectiveness has suffered. Part of this is in the statistics: abysmal clickthrough rates on many online display ads with percentages that trend toward the microscopic.

But another part is just plain intuition. People understand that when folks go online, they’re usually on a mission – whether it’s information-seeking, looking for products to purchase, or avocational pursuits.

Simply put, the “dynamic” is different than magazines, television or radio — although any advertiser will tell you that those media options also have their share of challenges in getting people to take notice and then to take action.

The perception that online display advertising is a “bad” investment when compared to search engine marketing is what’s given Google its stratospheric revenue growth and profits in recent years. And that makes sense; what better time to pop up on the screen than when someone has punched in a search term that relates to your product or service?

In the B-to-B field, the knock against display advertising is even stronger than in the consumer realm. In the business world, people have even less time or inclination to be distracted by advertising that could take them away from their mission at hand.

It doesn’t take a swath of eye-tracking studies to prove that most B-to-B practitioners have their blinders on to filter out extraneous “noise” when they’re in information-seeking mode.

This isn’t to say that B-to-B online display advertising isn’t occurring. In fact, in a new study titled Making Online Display Marketing Work for B2B, marketing research and consulting firm Forrester Research, Inc. reports that about seven in ten B-to-B interactive marketers employ online display advertising to some degree in their promotional programs.

And they do so for the same reasons that compelled these comparnies to advertise in print trade magazines in the past. According to the Forrester report, the primary objectives for online display advertising include:

 Increase brand awareness: ~49% of respondents
 Lead generation: ~46%
 Reaching key target audiences: ~46%
 Driving direct sales: ~41%

But here’s a major rub: Attitudes toward B-to-B online display advertising are pretty negative — and that definitely extends to the ad exchanges and ad networks serving the ads. Moreover, most don’t foresee any increased effectiveness in the coming years.

That may explain why Forrester found that fewer than 15% of the participants in its study reported that they have increased their online display advertising budgets in 2011 compared to 2010 – even as advertising budgets have trended upward overall.

When you look closer at display, there’s actually some interesting movement. Google has committed to a ~$390 million acquisition of display ad company Admeld. And regardless of the negative perceptions that may be out there, Google’s Ad Exchange and Yahoo’s Right Media platforms have created the ability for advertisers to bid on ad inventories based on their value to them.

Moreover, new capabilities make it easier to measure and attribute the impact of various media touchpoints — online display as well as others — that ultimately lead to conversion or sales.

But the negative perceptions about online display advertising continue, proving again that attitudes are hard to change — even in the quickly evolving world of digital advertising.